Charter To Pay $78B For Time Warner Cable

Transcript

RENEE MONTAGNE, HOST:

Another big merger has been announced this morning in the cable TV business. Time Warner Cable will join up with Charter Communications with Charter buying Time Warner for $78 billion. The deal comes less than a month after federal regulators killed a proposed merger between Time Warner and Comcast. They said that deal would've hurt competition for high-speed Internet services. NPR's Jim Zarroli is on the line to talk about the deal. Good morning.

JIM ZARROLI, BYLINE: Good morning.

MONTAGNE: So, Jim, presumably this deal wouldn't hurt competition?

ZARROLI: Well, I think they're betting on the fact that regulators will think it doesn't hurt competition as much as the Time Warner-Comcast deal would have. Charter is a smaller company, but it's controlled by John Malone. He's been in the cable business for a long time. Now, Malone has been trying to buy Time Warner for a while. It looked after the Comcast deal like he was out of the picture. Then the Comcast deal was blocked by the government. He came back in with this deal, which is worth about $78 billion when you bring - get in. And it looks like it stands a better chance of being approved.

MONTAGNE: And John Malone, as you said, the head of Charter Communications - tell us a little more about the role he plays in the cable TV business.

ZARROLI: Oh, he's one of the pioneers of the cable business. He took a company called Telecommunications Inc., made it one of the biggest cable companies largely because of a lot of mergers. He sold it to AT&T in 1998. Now he's going to be, once again, a big and very powerful player in cable. The new company's going to have 23 million customers, which will make it second only to Comcast, which is the largest. Malone has always been known as very knowledgeable about cable, about the multichannel business in general. And he's a very tough negotiator. I mean, he's known for being somebody you don't want to have to negotiate with. Al Gore, back when he was in the Senate before he was vice president, actually likened him to Darth Vader.

MONTAGNE: All right, although still, the cable TV business has changed a lot since the days when Malone got started. So what are some of the challenges that this new company would face?

ZARROLI: Yeah, it's changed dramatically, and it's going to change a lot more. You have all these different forces coming into play right now - the growth of cord cutters, for instance. These are people who say they don't need cable. They're going to get all their programming over the Internet. So you could say that the core business of cable TV is really under a lot of threat right now. So the new company that comes out of this merger is going to face a lot of challenges.

MONTAGNE: Well, let's get back to some more details on how this might work. The proposed merger of Time Warner and Comcast was essentially rejected by the government. What are the reasons to think that regulators will like this one any better?

ZARROLI: Well, there were several big problems with the deal between Comcast and Time Warner. Comcast was already a really big player in programming. It owns NBC Universal. So it really would've had a lot of power, both over cable systems and over other programmers. Charter doesn't have that same issue. The really big problem, I think, for the FCC was that a merger between Comcast and Time Warner would've given the new company a really big chunk of the broadband Internet market. That's really what the FCC was worried about. It would've had a big effect on competition. But after it rejected that deal, the head of the FCC, Tom Wheeler, came out and said he wasn't necessarily opposed to all deals. And so now Charter thinks it's going to see this deal, this merger, more favorably.

MONTAGNE: NPR's Jim Zarroli reporting on the proposed purchase of Time Warner Cable by Charter Communications. Jim, thanks very much.

ZARROLI: You're welcome. [POST-BROADCAST CORRECTION: We say that John Malone is the head of Charter Communications, the company that has announced a deal to acquire Time Warner Cable. Malone, the chairman of Liberty Media, is a key figure driving the deal. But he is not the chairman or CEO of Charter. Tom Rutledge is the CEO of Charter Communications.] Transcript provided by NPR, Copyright NPR.